CSR Guidelines for the Financial Sector - page 77

Social Return on Investment
To fully undertake aCSR Audit an organization should consider the social return of its investments. As organizations
are quickly increasing their investments in the areas of CSR, it is becoming paramount tomeasure the impact of
these investments.
Impact measurement is valuable to organizations for two key reasons: (1) It enables them to identify their best
investments and improve onmediocre ones; and (2) It shows commitment to transparency and accountability to a
variety of stakeholders.
It has long been debated that what cannot bemeasured cannot bemonitored, improved nor of significant added
value; this is where the concept of Social Return on Investment (“SROI”) stems from.
Return on Investment (“ROI”) is a common financial termwith clearly defined parameters for calculation. However,
these parameters do not take into account the non-financial value of social and environmental investments that
comes in the form of impact created on the brand, reputation, social commitment etc. As such, SROI is a valuable
tool to capture these impacts and helpmeasure the value of these investments.
Measuring the SROI begins at the outset of each strategy, program or initiative by creating parameters with clear and
measurable objectives ensuringCSR investments get a high return demonstrating the resulting value to shareholders
and stakeholders alike.
Principles of SROI
Tomeasure your organizations SROI, it is valuable to consider the seven principles of SROI. These are:
1. Involve stakeholders:
Informwhat getsmeasured and how this ismeasured and valued by involving stakeholders.
This principlemeans that stakeholders need to be identified and then involved in consultation throughout the
analysis, in order that the value, and theway that it ismeasured, is informed by those affected by or who affect the
2. Understand the changes:
Articulate how change is created and evaluate this through evidence gathered, recognizing positive and negative
changes as well as those that are intended and unintended.
Value is created for or by different stakeholders as a result of different types of change; changes that the
stakeholders intend and do not intend, as well as changes that are positive and negative. This principle requires the
theory of how these changes are created to be stated and supported by evidence. These changes are the outcomes
of the activity, made possible by the contributions of stakeholders, and often thought of as social, economic or
environmental outcomes. It is these outcomes that should bemeasured in order to provide evidence that the change
has taken place.
3. Value the things thatmatter:
Use financial proxies in order that the value of the outcomes can be recognized. Many outcomes are not traded in
markets and as a result their value is not recognized. Financial proxies should be used in order to recognize the
value of these outcomes and to give a voice to those excluded frommarkets but who are affected by activities. This
will influence the existing balance of power between different stakeholders.
A guide to Social Return on Investment pg. 97
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